Yahoo Finance China Eases Rules That Could Slow World-Beating Solar Boom
(Bloomberg) -- China has allayed fears that growing grid congestion could tap the brakes on its record pace of renewable installations, by relaxing limits on how much renewable power can be utilized in energy-rich areas.
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The move is one of a number of government policies released on Wednesday designed to promote clean energy. Others include speeding up battery storage installations and accelerating the build-out of power lines. Beijing has also called for a more rigorous approval process for some clean energy manufacturing amid excess capacity that’s slashed corporate profits.
The new policies serve China’s existing goals of cutting nationwide energy consumption and carbon dioxide emissions per unit of GDP by 2.5% and 3.9% respectively in 2024. The government’s top economic planning agency acknowledged at a briefing on Thursday that it’s fallen behind its targets, and will likely miss the 13.5% reduction in energy intensity by 2025 that was laid out in the current five-year plan.
Shares of Chinese clean energy companies broadly rose on the policies included in the State Council’s action plan. Polysilicon maker GCL Technology Holdings Ltd. rose as much as 10% in Hong Kong, while wind farm operator China Longyuan Power Group Corp. gained as much as 6.1%.
Power Wastage
The plan implements a widely rumored change to rules governing how much renewable power can be wasted because of grid-capacity constraints. Wind and solar farms in “areas with better resource conditions” can now have as much as 10% of their generation curtailed, compared to a previous cap of 5%. China has seen increased curtailments this year after shattering records for solar and wind installations in 2023.
The change will allow more renewables to be deployed in places where the grid would have been deemed overcrowded. That could mean China installs an additional 30 gigawatts of solar panels this year, Albert Miao, head of Asia energy transition research at Macquarie Capital, said in a note.
At the same time, it could pressure profits at renewable power plants, which may see more of their generation cut off, according to Dennis Ip, an analyst at Daiwa Capital Markets. Still, those utilities are likely to benefit from other policy tailwinds for clean energy in the government’s plan, he said.
The plan also calls for better deployment of new production capacity for a number of new energy metals, including the silicon used in solar manufacturing and the lithium in batteries. It also prohibits preferential power rates for sectors with high energy intensity, a move that’s likely to benefit GCL’s low-energy polysilicon production methods, Ip said.
Other policies include raising battery storage capacity to 40 gigawatts by 2025, from a previous target of 30 gigawatts.
(Updates with new details and share prices throughout)
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